In 'risky' strategic change, ING eyes sweeping online centralization

ING GroepNV will eventually scrap the various online platforms it has in 20European countries in favor of a single centralized service that will be thesame everywhere.

The Dutch bank is accelerating its "Think Forward"restructuring plan, investing €800 million in digitization efforts as it looksto generate €900 million in annual cost savings by 2021. The company also plansto cut 7,000 jobs, mainly in Belgium and the Netherlands, and will book a provisionof about €1 billion in the fourth quarter that will cover redundancy packages.The 7,000 figure includes about 1,000 at supplier companies.

As part of the new strategy, ING upped its target forprimary customers to 14 million by 2020, from 10 million, and set a group-levelcost-to-income target of 50% to 52%.

"We're a simple bank. We get savings in and welend it out. It's not more difficult than this but we have to do it in a veryefficient way," said CEO Ralph Hamers on an Oct. 3 conference call.

He said the challenge for the bank is to reduce the numberof different banking platforms it uses to one, and to create a single valueproposition that is the same across the different markets where it operates.

"It's a huge step; it will cost a lot of money and it'spretty risky," he said.

The restructuring will be done in stages, with anintermediate phase to be completed by 2021, he said, without committing to adeadline for the full completion of the project.

The final aim, Hamers said, is to build an online platformthat can be used to expand ING into new countries at little cost and effort.

"7,000 is a large number of employees to reduce,but for ING themselves the cost savings will be quite positive," saidClaire McNicol, a senior credit analyst in Rabobank's London office, in aninterview. She added, however, that the bank will have to take into accountdifferences in local regulation and market demand when implementing itsunification project.

Hamers said ING now considers itself to be incompetition with the likes of Google and Facebook.

"Customers are influenced by the levels ofservice they get from other digital providers," he said."Theway Facebook works in one country is completely the same as [how] Facebookworks in other countries. Why would banking be different?"